July 26, 2002 — Sensing a market bottom, many value managers have zeroed in on companies they've liked for a long time, believing they've been unfairly beaten down.
"You have to stick with the companies you know and trust," said Thyra Zerhusen, manager of ABN AMRO Talon Mid Cap Fund (CHTTX), who also feels, "valuations are finally really attractive." Lately, Zerhusen has mostly been adding to existing positions because she feels there is great confusion in the market. Concerned about high volatility, Zerhusen has stuck with long-term holdings, saying "you know them — they've told you their problems in the past."
Focusing on strong balance sheets, Zerhusen has recently added to Diebold, Inc. (DBD), which has an "ethical" management and Boston Scientific (BSX), whose earnings recently beat estimates. Zerhusen also favors technology companies, particularly business processing and storage software. Her picks include Unisys Corp. (UIS) and EMC Corp. (EMC).
Believing that the stocks he owns "are getting cheaper by the day," Peter Morris, manager of Homestead Small Company Stock Fund (HSCSX), has recently added to such holdings as Southwest Airlines (LUV) and Hewlett-Packard (HPQ). A bottom-up investor, Morris feels "now is a good opportunity to buy" because investors are overreacting to corporate governance scandals. Financial misdeeds aren't new, said Morris, who points to ten years ago when Rudolph Giuliani, then U.S. District Attorney, had several employees at Goldman Sachs (GS) handcuffed.
